Monday, July 15, 2013

Investopedia: Citigroup Continues The Theme Of Decent Big Bank Earnings

Not to be left behind by JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) announced a respectable set of results for its second quarter, featuring much of the same “better fee income, lower credit costs, but tighter spreads and weak lending” themes we have seen and expected for this quarter. Citi continues to make progress pulling itself out of its own credit/loan loss mess, and relative normalcy seems to be in sight.

Citi is a curious stock when it comes to valuation, though. While the market seems willing to assume that the bank will return to a low double-digit ROE for the long-term, investors appear to be awarding the company a lower tangible book value multiple than would otherwise seem fair relative to the returns it generates on assets. In any case, these shares appear to be somewhat undervalued, but don't seem like a major opportunity at this point.

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